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Stand on Guard, The perils of a US LLC Structure for Canadian Companies & Individuals

Stand on Guard, The perils of a US LLC Structure for Canadian Companies & Individuals



Stand on Guard, The perils of a US LLC Structure for Canadian Companies & Individuals
20 Mar 2017
Written by: Joseph Bonvillain

Issue: US LLC Taxation

An ownership investment in a Limited Liability Company (LLC) and the incorporation of an LLC for a US business is highly conventional as a LLC is an efficient tax structure designed for a US taxpayer. Investments in a US LLC are often sold unwittingly to Canadian individuals and companies who do not realize that being a Canadian partner in a US LLC can create total tax rates that exceed 60% through double taxation. This unwelcome surprise will also result in Canadians paying US tax themselves on their share of the LLC’s income, which flows through to an owner and member of an LLC.   

Consider: 

  • How comfortable are you with reporting to the IRS?
  • Would you prefer to separate US operations from other business activities or investments, and isolate the reporting and filing requirement?
  • Do you have plans to reinvest US based profits for further business growth and investment in the US or are you going to repatriate profits to Canada or outside the US?   

How Manning Elliott can help: 

Our Manning Elliott tax team will guide you to a plan to clarify and distinguish the LLC’s US operations from non-US activities of LLC investors, simplifying reporting to the IRS and individual US states. Manning Elliott provides expert advice to investors and companies that operate in the US, and we are ready to assist you with US and Canadian cross border tax and accounting advice for IRS and CRA reporting.


If you have any questions about the US LLC Canadian tax treatment, please contact a member of the Manning Elliott Tax Team at 604-714-3600.

The above content is believed to be accurate as of the date of posting. Canadian Tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.

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